Questions Loom over Status of Shuttered McNeil Plant

Oct. 23--The big cranes doing the heaviest lifting for the $100
million in repairs and renovations to the still-idle McNeil
Consumer Healthcare manufacturing plant in Fort Washington are
gone.

Many employees in various departments show up daily, but they
aren't making Tylenol, Motrin, and Benadryl, which are mostly
absent from drugstore shelves in nearby Ambler as the cold-and-flu
season approaches.

The heavy profits from those products are also missing from the
balance sheet of Johnson & Johnson, the parent company -- a
major point made by corporate officials last week as they explained
a disappointing third-quarter earnings report.

McNeil voluntarily stopped manufacturing at the Fort Washington
facility in April 2010 because of production problems and dozens of
product recalls for a variety of reasons. Between 300 and 400
people lost their jobs. The company declined to say how many work
there now.

The McNeil division, which falls under the consumer-products
umbrella of J&J, also has plants in Lancaster and Las Piedras,
Puerto Rico, and those facilities continue to make over-the-counter
medicines known the world over.

Eighteen months have passed since the shutdown, and great
uncertainties exist, including when the Fort Washington plant will
resume production. McNeil will have to satisfy terms of a consent
decree approved by the U.S. District Court in Philadelphia and
negotiated with the U.S. Justice Department. That five-year
arrangement involves greater scrutiny from regulators, including
the U.S. Food and Drug Administration.

To avoid bad publicity and lessen exposure to litigation,
company officials remain hesitant to describe in detail the
problems that occurred and any steps taken to solve them. Legal
cases, reports from federal regulators, and interviews with former
employees shed some light on problems that existed on the factory
floor and in management offices -- not just in Fort Washington but
extending to J&J headquarters in East Brunswick, N.J.

One of the common problems involved reports of medicines
smelling musty or moldy. Eventually, the odor problems were traced
to pesticides used to treat wooden shipping pallets.

But in 2010, when the company was scrambling to diagnose the
problem, it called Microanalytics, a small company in Round Rock,
Texas, that specializes in detecting and identifying odors,
according to a 2011 report by a special committee of the J&J
board of directors that was submitted as evidence in a shareholder
lawsuit.

Identifying causes should lead to remedies, but Microanalytics
declined comment when contacted last week by The Inquirer.

People do not want their medicines to smell musty and moldy.
They do not want tiny bits of metal in the medicine. They do want
the mixtures to be correct and the mixing containers and tools to
be cleaned properly beforehand.

All of those were problems that led to recalls of products made
in Fort Washington. Two websites maintained by McNeil list 85
recalls, beginning in 2009.

Several former McNeil employees say they believe the problems
that resulted in the plant closing in 2010 can be traced to 2006
and J&J&apos;s $16.6 billion purchase of Pfizer Consumer
Healthcare.

Company news releases were quick to tout J&J's history of
quality and performance, and forecast "synergies" -- Wall
Street-speak for job eliminations -- that would save $500 million
to $600 million by 2009.

A former McNeil worker, who asked not to be named, said the
volume of work increased and staff decreased, including veteran
plant managers. Younger replacements, even if they tried
diligently, were not familiar with quality-control routines, the
workers contend.

"When they leave, they take the routine with them," said the
man, who needed anonymity to protect his severance and pension
payments. "It can be a couple of little things that are let go and
turn into problems, like machine parts wearing out."

The 2011 special committee report to the J&J board explains
metals being discovered in medicine: "On April 8, 2010, small black
particles were observed in 3 out of 24 bottles of Infants' Tylenol
coming off a filling line at Fort Washington. The particles were
subsequently determined to be comprised of acetaminophen, nickel,
chromium, tin, and bismuth . . . A subsequent investigation
determined that metal-on-metal wear of the pistons in equipment on
the bottling line was the probable source of the particles."

In the midst of the tumult, J&J chief executive officer
William Weldon visited the plant and spoke to workers, some of whom
had never seen him before.

"The CEO called us 'sloppy, lazy workers' -- those are the words
I remember," said the former employee. "Leadership didn&apos;t
take any of the blame."

Weldon could not be reached for comment. A J&J spokesman
said via e-mail that in visits to McNeil facilities during the last
two years, "Mr. Weldon has repeatedly thanked people for all their
hard work and he has stressed the vital role they play in getting
high-quality products back into the hands of our consumers."

The June report to the board of directors exonerated the board
and senior management, but it confirmed former employees' comments
about understaffing after the Pfizer acquisition and production of
additional medicines commenced. The report said quality-control
"headcount may not have increased sufficiently to adjust to this
added complexity."

Erik Gordon, a University of Michigan business professor,
follows the pharmaceutical industry and has for years.

"The people at that plant [Fort Washington], even the plant in
Puerto Rico, know how to produce quality products," Gordon said.
"It's not like everybody at that plant got stupid overnight. They
were under tremendous pressure from the top to cut costs."

Dominic Caruso, J&J's chief financial officer, said this
week that the company hopes that in 2012 repair costs decrease and
production and revenue increase, though no one has said when the
Fort Washington plant might resume making medicine for sale. The
plants in Lancaster and Puerto Rico continue to operate under
greater Food and Drug Administration supervision.

Sue Price had worked at McNeil, but her job was eliminated in
2008. Now she works there as a part-time contractor. Price was
bitter when her job was eliminated, but she believes the mood at
McNeil has improved under newly named president Denice Torres, a
veteran J&J executive.

"She is communicating in a wonderful, cheerful, frequent way
with the McNeil community," Price said. "They are trying to bring
back some of the culture that was lost for a bit."

Some Recalled McNeil Products

Tylenol Allergy Multi-Symptom Cool Burst Caplets

Tylenol Arthritis Pain Geltabs

Tylenol 8 Hour Caplets

Benadryl Allergy Plus Sinus Headache Kapgels

Sinutab Sinus Coated Caplets

Sudafed PE Cold & Cough Coated Caplets

Rolaids Multi-Symptom Tablet

Source: McNeil Consumer Healthcare

Read more about the McNeil Consumer Healthcare recalls --
including lists of the medications -- and additional coverage of
the region's pharmaceuticals business at www.philly.com/pharma

Contact staff writer David Sell at 215-854-4506,
dsell@phillynews.com, or @phillypharma.com on Twitter. Read his
blog at www.philly.com/phillypharma

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